Statutory bar on coercive recovery protects sick industrial company assets during rehabilitation proceedings absent board consent.
Under the Sick Industrial Companies (Special Provisions) Act, 1985, coercive recovery against a sick industrial company's properties is barred while a reference is pending, inquiry is underway, or a rehabilitation scheme is in preparation, unless the Board or Appellate Authority consents. The protection under section 22 operates automatically to preserve assets for revival, and the fact that the dues were excise-related did not displace the statutory prohibition. Accordingly, attachment of the company's properties during the pendency of the rehabilitation process was impermissible and liable to be quashed, leaving the company to proceed in accordance with law after obtaining the requisite permission.
Issues: Whether the excise authorities could attach the properties of a sick industrial company during the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 and before sanction of a revival scheme.
Analysis: The statutory scheme under sections 15, 16, 17 and 22 of the Act shows that once a reference is made, inquiry is pending, or a scheme is under preparation, proceedings for execution, distress or similar coercive recovery action against the properties of the sick company cannot continue without the consent of the Board or the Appellate Authority. The protection is automatic and is intended to preserve the company's assets until the rehabilitation process is worked out. The authorities' reliance on the nature of excise dues did not alter the statutory bar, particularly when the scheme had not yet been sanctioned.
Conclusion: The attachment proceedings were not permissible and were liable to be quashed.
Final Conclusion: The writ petition succeeded, the impugned attachment order was set aside, and the sick company was left to pursue remedies in accordance with law after obtaining the requisite permission from the Board.
Ratio Decidendi: When an inquiry or scheme process under the Sick Industrial Companies (Special Provisions) Act, 1985 is pending, coercive recovery measures against the properties of a sick industrial company are barred by section 22 unless consent of the Board or Appellate Authority is obtained.
TaxTMI 
AI Drafter ✕
TaxTMI 
